Businesses must evolve along with global climate policy
If businesses prepare for new post-Paris Agreement climate regulations, the economy could reap $10 trillion annually by 2050.
Delegates gathered in Bonn, Germany last week to discuss progress on the historic Paris Agreement on climate change, a valuable roadmap for creating the low-carbon economy. Most were government officials, but businesses also attended, many of them to highlight their strategies to keep ahead of regulation by taking action on climate. It is critical that governments and businesses collaborate closely if the goals of the Paris Agreement are to be achieved.
Nationally Determined Contributions (NDCs) — the climate action plans individual countries have articulated to realize the Paris vision — are being implemented at scale, transforming the regulatory landscape that businesses operate in, sector by sector. According to a recent study from the London School of Economics, up to 47 new climate laws have been ratified around the globe since the Paris Agreement was adopted. It is sometimes hard, however, for global organizations to keep track of each policy in each jurisdiction.
Businesses that effectively prepare for these new policies and sustainable investment opportunities will be in a better position to seize the benefits of the transition. These include innovation, risk management, competitiveness and growth — opportunities that, as Morgan Stanley noted in a recent blog post, could amount to $10 trillion annually by 2050.
Accurate and up-to-date information on climate policy can help inform corporate strategy and investment decisions. Moreover, this information can help to demonstrate the need for corporate climate action to key stakeholders, including investors, board members and employees.
Forward-looking companies are already responding to the challenges that climate change presents with ever-more-ambitious plans to reduce their greenhouse gas emissions across their value chains. To date, over 620 companies have committed to climate action via the We Mean Business Take Action campaign, including some 130 industrial companies, over 40 utilities and three of the world’s largest consumer goods companies: Nestlé; Procter & Gamble; and Unilever.
Together, these companies have committed to cut about 2.31 gigatons of Scope 1 and 2 greenhouse gas emissions — a reduction that would be equivalent to the total annual emissions of Russia.
Not only are businesses responding to the threat of climate change, policymakers are actively working to address the issue through new laws that would, for example, phase out fossil fuel-powered vehicles. Just last month, GM announced plans to launch 20 new electric vehicles by 2023, which aligns with new regulations to promote a shift to electric vehicles in countries such as India and the U.K.
For business, knowing which policy is relevant is a potentially complex process. But if businesses quickly can identify regulations relevant to their operations and supply chains and recognize critical differences between geographies and sectors, they can factor them into their low-carbon strategies.
The Climate Policy Tracker, an online tool led by We Mean Business coalition partner BSR, has been developed to provide up-to-date information on the landscape of climate regulation. The tracker includes 120 policies from nine geographies: China; the United States; EU; India; Japan; South Korea; Brazil; South Africa; and the U.K. Moving forward, more countries will be added to the tool, as will information on policies in cities, states and regions.
The growing action from companies to combat climate change is giving governments increased confidence to ratchet up their own commitments, supporting their efforts to fully implement the Paris Agreement with targeted policy interventions.
As the scale and ambition of climate policies increase, forward-looking companies can use the Climate Policy Tracker to stay ahead of the curve. By embracing and acting on climate policy in this way, businesses are demonstrating their abilities to future-proof their operations and their active support for the Paris Agreement vision.